Ag Shipping Back on Track(s)

May 13, 2022

Keep your marketing and production input plans in place.

‘Cause rail shipping may finally be back on track.

Late last week, the Surface Transportation Board (STB) issued new rules requiring all Class I railroads (aka, “the big guys”) to submit frequent status reports while the STB investigates railway congestion.

In English? Keep us updated while we determine how to deal with your issues.

Background: For months, rail delays have caused major headaches across the country—and agriculture is feeling the brunt of the slowdowns.

By the numbers:

  • Grain train speed: down 6%
  • Terminal wait times: up 22%
  • Railcar delivery bids: up $3K over average cost (USDA report)

In response, the STB held an “Urgent Issues in Freight Rail Service” hearing late last month, telling dozens of rail shippers to basically, “say whatever you want.”

And they did… practically railroading Class I companies.

The National Grain and Feed Association, representing companies that operate over 8,000 grain facilities, testified and noted how railcars delayed at their facilities due to COVID-related labor shortages are charged demurrage fees.

But if the railroad fails to move filled cars due to the same labor issues… the grain facilities aren’t compensated.

Yeah… like that’s fair.

The NGFA estimates that revenue loss for member companies due to RR issues topped $100M—just for the first quarter of 2022.

Where this goes: Under the new rules, Class I carriers must develop comprehensive service recovery plans while the STB extensively monitors the improvement process.

Fingers crossed that growing-season crop inputs and marketed commodities will be riding the rails with a little more speed.